$70,000,000 VIRGINIA HOUSING DEVELOPMENT AUTHORITY Commonwealth Mortgage Bonds 2012 Series C-Non-AMT, Subseries C-8

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1 NOT A NEW ISSUE REMARKETING OF PREVIOUSLY ISSUED BONDS Ratings Moody s S&P Aaa AAA (See Ratings herein) On the date of issuance of the Offered Bonds, Hawkins Delafield & Wood LLP, then Special Tax Counsel (and currently Bond Counsel) to the Authority, delivered its opinion that under then-existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, interest on the Offered Bonds (i) is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Code, and (ii) is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code, and is not included in the adjusted current earnings of corporations for the purpose of calculating the alternative minimum tax. For more information concerning the tax treatment of the interest on the Offered Bonds, see Tax Matters herein. Under the Virginia Housing Development Authority Act, income on the Offered Bonds, including any profit made on the sale thereof, is not included in taxable income for purposes of income taxation by the Commonwealth of Virginia and by the municipalities and all other political subdivisions of the Commonwealth of Virginia. $70,000,000 VIRGINIA HOUSING DEVELOPMENT AUTHORITY Commonwealth Mortgage Bonds 2012 Series C-Non-AMT, Subseries C-8 Maturity Date (October 1) Principal Amount $1,275,000 2,005,000 3,150,000 3,280,000 3,215,000 3,055,000 3,055,000 3,185,000 3,085,000 3,115,000 Serial or Term Serial Serial Serial Serial Serial Serial Serial Serial Serial Serial Interest Rate 0.65 % ,270,000 Term UP ,310,000 Term UQ27 CUSIP 92812UN UN UN UP UP UP UP UP UP UP85 Price of all Offered Bonds 100% Dated Date: Date of Delivery Principal on the Offered Bonds is payable at maturity or prior redemption. Interest on the Offered Bonds commences to accrue on the date of delivery thereof and is payable semi-annually on each April 1 and October 1, commencing April 1, The Offered Bonds are issuable in $5,000 denominations and in integral multiples thereof. The Offered Bonds will be initially available and may be purchased only in book-entry form through the facilities of DTC. U.S. Bank National Association, Minneapolis, Minnesota, is the Trustee. The Offered Bonds are secured, equally and ratably with the Currently Outstanding Bonds and any Commonwealth Mortgage Bonds hereafter issued (except as otherwise noted herein), by Mortgage Loans, Investment Obligations, Revenues and other Assets of the Authority pledged thereto, and are general obligations of the Authority, subject to agreements heretofore or hereafter made with owners of Authority obligations other than Owners, all as more fully described herein. The Authority has no taxing power. The Commonwealth Mortgage Bonds do not constitute a debt or grant or loan of credit of the Commonwealth of Virginia, and the Commonwealth of Virginia shall not be liable thereon, nor shall the Commonwealth Mortgage Bonds be payable out of any funds other than those of the Authority. The Offered Bonds are re-offered for delivery when, as and if the conditions precedent to the conversion of the interest rates thereon and the remarketing thereof are satisfied, subject to prior sale, or withdrawal or modification of the offer without notice. At the time of issuance of the Offered Bonds on December 20, 2012, the Approving Opinion of Hunton & Williams LLP, Richmond, Virginia, then Bond Counsel to the Authority, as more fully described in Legal Matters herein, was delivered. In addition, at the time of such issuance of the Offered Bonds, the Tax Opinion of Hawkins Delafield & Wood LLP, New York, New York, then Special Tax Counsel (and currently Bond Counsel) to the Authority, as more fully described in Tax Matters and Legal Matters herein, was delivered. Certain legal matters will be passed upon for the Remarketing Agents by their counsel, Kutak Rock LLP, Atlanta, Georgia. It is expected that the Offered Bonds will be available for delivery through DTC in New York, New York, on or about December 19, Wells Fargo Securities BB&T Capital Markets BofA Merrill Lynch a division of BB&T Securities LLC Davenport & Company LLC November 18, 2013 RAYMOND JAMES

2 No dealer, broker, salesman or other person has been authorized by the Authority or the Remarketing Agents to give any information or to make any representations other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized. There shall not be any offer or re-offer, solicitation or sale of the Offered Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer or re-offer, solicitation or sale. Information set forth herein has been furnished by the Authority and other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness by the Remarketing Agents. The information and expressions of opinion herein speak as of their date unless otherwise noted and are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority since the dates as of which information is given herein. The Remarketing Agents have reviewed the information in this Official Statement in accordance with, and as part of, their responsibility to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Remarketing Agents do not guarantee the accuracy or completeness of such information. TABLE OF CONTENTS Page PART I THE OFFERED BONDS... 1 INTRODUCTION... 1 DESCRIPTION OF THE OFFERED BONDS... 3 Special Redemption... 3 Optional Redemption... 4 Sinking Fund Redemption... 5 Selection of Bonds for Redemption... 5 Notice to Owners... 5 Purchase... 6 SECURITY... 6 Pledge of Assets... 6 Mortgage Loans... 6 Exchange Agreements, Enhancement Agreements, and Other Financial Agreements... 6 Investment Obligations... 7 Sources of Payment... 7 Amendments to Resolution; Commonwealth Mortgage Bonds Acquired by the Authority... 8 General Obligations of the Authority... 8 Other Bond Resolutions... 9 WITHDRAWAL OF ASSETS; LIMITED OPERATING COVENANTS SUMMARY OF CERTAIN PROVISIONS OF THE CURRENT RESOLUTION Definitions Assets and the Pledge Thereof Application of Assets for Payment of Bond Amounts Withdrawal, Transfer, Sale, Exchange and Modification of Assets Revenue Test Investment of Funds Covenants Incurrence of Additional Bond Obligations Amendments Defeasance Trustee Events of Default Remedies Record Dates Registration Law Applicable Effect of Restated Bond Resolution on Bonds Outstanding on Effective Date TAX MATTERS Federal Taxes Backup Withholding and Information Reporting Virginia Taxes Proposed Legislation and Other Matters CONTINUING DISCLOSURE LEGAL MATTERS REMARKETING RATINGS LITIGATION LEGAL INVESTMENT MISCELLANEOUS PART II SUMMARY OF PROGRAMS THE SINGLE FAMILY PROGRAMS General Description of Single Family Programs Summary of Types of Single Family Mortgage Loans Single Family First Mortgage Loans Currently and Previously Financed Single Family Second Mortgage Loans Currently and Previously Financed Other Single Family Mortgage Loan Financings Prior to April 1, Single Family Mortgage Loan Insurance Single Family Mortgage Loan Terms Security for Single Family Mortgage Loans Page Other Financing of Single Family Mortgage Loans New Issuance Bond Program and Homeownership Mortgage Bonds Ginnie Mae Financing Fannie Mae Financing FHA and VA Streamline Refinance Programs Data on Single Family Mortgage Loans Future Funding of Single Family Programs Single Family Mortgage Loan Origination Procedures and Underwriting Criteria Servicing of Single Family Mortgage Loans Loan Modifications Declining Markets; Risk of Loss THE MULTI-FAMILY PROGRAM General Federal Programs and Requirements Requirements Applicable to Developments Financed by Tax Exempt AMT Bonds and Tax Exempt Non-AMT Bonds Requirements Applicable to Developments Financed by Transitioned 1954 Code Tax Exempt Non-AMT Bonds Authority Income Limits Economically Mixed Multi-Family Developments Underwriting Commitment and Initial Closing Construction Final Closing and Certifications Permanent Financing Regulation and Management Delinquencies and Foreclosures; Risk of Loss MISCELLANEOUS PROGRAMS CERTAIN PROGRAMMATIC CONSIDERATIONS Geographic Concentration in Virginia Changes in Federal or State Law and Programs Prepayments PART III THE AUTHORITY THE AUTHORITY Commissioners Management Structure; Principal Staff Officers Program Funds Summary of Revenues, Expenses, and Net Assets Selected Figures Excluding Effects of GASB Prior and Anticipated Financings of the Authority Investments The Common Fund General Fund and Other Net Assets Appendices: A Financial Statements B Data on Single Family Mortgage Loans C Additional Information Concerning Single Family Mortgage Insurance Policies D Certain Federal Income Tax Matters Relating to Single Family Mortgage Loan Programs E Developments and Authority Property Financed by Rental Housing Bonds F Information Concerning Federal Multi-Family Housing Programs G Description and Procedures of DTC H Summary of Continuing Disclosure Agreement I Approving Opinion of Hunton & Williams LLP, for the Offered Bonds delivered on December 20, 2012 J Tax Opinion of Hawkins Delafield & Wood LLP, for the Offered Bonds delivered on December 20, 2012 K Proposed Form of Opinion of Hawkins Delafield & Wood LLP, to be delivered on the date of delivery of the Offered Bonds i

3 OFFICIAL STATEMENT PART I THE OFFERED BONDS INTRODUCTION Capitalized terms used in this Official Statement, unless otherwise herein defined, shall have the meanings set forth in a resolution adopted by the Virginia Housing Development Authority (the Authority ) on July 15, 1986, as amended and restated to the date of delivery of the Offered Bonds (the Current Resolution ) authorizing the issuance and sale of the Commonwealth Mortgage Bonds. The Current Resolution, as hereafter modified, amended or supplemented from time to time, is referred to herein as the Resolution. See Definitions in Summary of Certain Provisions of the Current Resolution for definitions of certain of such capitalized terms in the Current Resolution. The following terms are used in this Official Statement to refer to the Commonwealth Mortgage Bonds listed below. Term Referenced Bonds Commonwealth Mortgage Bonds... Currently Outstanding Bonds (including the Offered Bonds and the other Series ABC Bonds) and any bonds hereafter issued under the Resolution Converted Series C Bonds... Subseries C-2 Bonds, Subseries C-3 Bonds, Subseries C-4 Bonds, Subseries C-5 Bonds, Subseries C-6 Bonds and Subseries C-7 Bonds Currently Outstanding Bonds... Bonds previously issued under the Resolution presently outstanding as of the date of this Official Statement, including the Offered Bonds and the other Series ABC Bonds Offered Bonds or Offered Tax Exempt Bonds... Commonwealth Mortgage Bonds, 2012 Series C-Non-AMT, Subseries C-8 Series A Bonds... Commonwealth Mortgage Bonds, 2012 Series A-Non-AMT Series ABC Bonds... Series A Bonds, Series B Bonds, and Series C Bonds Series ABC-1 Bonds... Series A Bonds, Series B Bonds and Subseries C-1 Bonds Series B Bonds... Commonwealth Mortgage Bonds, 2012 Series B-AMT Series BC Bonds... Series B Bonds and Series C Bonds Series C Bonds... The Subseries C-1 Bonds and the Subseries C-STEM Bonds Subseries C-1 Bonds... Commonwealth Mortgage Bonds, 2012 Series C-Non-AMT, Subseries C-1 Subseries C-2 Bonds... Commonwealth Mortgage Bonds, 2012 Series C-Non-AMT, Subseries C-2 Subseries C-3 Bonds... Commonwealth Mortgage Bonds, 2012 Series C-Non-AMT, Subseries C-3 Subseries C-4 Bonds... Commonwealth Mortgage Bonds, 2012 Series C-Non-AMT, Subseries C-4 Subseries C-5 Bonds... Commonwealth Mortgage Bonds, 2012 Series C-Non-AMT, Subseries C-5 Subseries C-6 Bonds... Commonwealth Mortgage Bonds, 2012 Series C-Non-AMT, Subseries C-6 Subseries C-7 Bonds... Commonwealth Mortgage Bonds, 2012 Series C-Non-AMT, Subseries C-7 Subseries C-STEM Bonds or STEM Bonds... Commonwealth Mortgage Bonds, 2012 Series C-Non-AMT, Subseries C- STEM, including the Offered Bonds and the Converted Series C Bonds Taxable Bonds... Bonds on which interest is included in gross income for federal income tax purposes Tax Exempt AMT Bonds... Tax Exempt Bonds, including the Series B Bonds, on which the interest is treated as a preference item in determining the tax liability of individuals, corporations and other taxpayers subject to the alternative minimum tax imposed by Section 55 of the Code Tax Exempt Bonds... Bonds, including the Offered Bonds and the other Series ABC Bonds, on which interest is not included in gross income for federal income tax purposes pursuant to Section 103 of the Code 1

4 Tax Exempt Non-AMT Bonds... Tax Exempt Bonds, including the Series C Bonds, on which the interest is not treated as a preference item in determining the tax liability of individuals, corporations and other taxpayers subject to the alternative minimum tax imposed by Section 55 of the Code and is not included in the adjusted current earnings of corporations for purposes of the alternative minimum tax Transitioned 1954 Code Tax Exempt Non-AMT Bonds... Tax Exempt Bonds, including the Series A Bonds, on which the interest is not treated as a preference item in determining the tax liability of individuals, corporations and other taxpayers subject to the alternative minimum tax imposed by Section 55 of the Code and is included in the adjusted current earnings of corporations for purposes of the alternative minimum tax This Official Statement is being distributed by the Authority to furnish pertinent information in connection with this reoffering of the Offered Bonds. The Offered Bonds are being re-offered hereby pursuant to the Virginia Housing Development Authority Act (the Act ), the Current Resolution, the Bond Limitations Resolution adopted by the Authority on March 27, 2012 and the Written Determinations, as amended, as to the terms of the Offered Bonds. In connection with the prior issuance of Commonwealth Mortgage Bonds, the Authority has adopted Series Resolutions and Bond Limitations Resolutions and has executed Written Determinations. The Current Resolution, as so amended, modified and supplemented to the date of delivery of the Offered Bonds by such Series Resolutions, Bond Limitations Resolutions and Written Determinations, is referred to herein as the Commonwealth Mortgage Bonds Resolution. The Authority adopted the Current Resolution to issue Commonwealth Mortgage Bonds, including the Offered Bonds, for the principal purpose of funding its single family housing programs (see The Single Family Programs ). The Offered Bonds are secured equally and ratably with the Currently Outstanding Bonds and any additional Commonwealth Mortgage Bonds issued under the Current Resolution. The Authority anticipates that additional parity Commonwealth Mortgage Bonds will be issued in the future. The Current Resolution also permits the Authority to execute Exchange Agreements (such as swap agreements), Enhancement Agreements (such as agreements related to bond insurance) and Other Financial Agreements under which the Authority s obligations are payable from Assets and are treated as Bond Obligations payable from the same sources and on a parity basis with the Commonwealth Mortgage Bonds (see Exchange Agreements, Enhancement Agreements, and Other Financial Agreements in Security ). On December 20, 2012, the Authority issued $790 million of its Series ABC Bonds. The Series A Bonds in the amount of $74,490,000, the Series B Bonds in the amount of $47,340,000, and a portion of the Series C Bonds (herein referred to as the Subseries C-1 Bonds ) in the amount of $108,170,000 were issued bearing fixed interest rates. The balance of the Series C Bonds (herein referred to as the STEM Bonds ), in the aggregate principal amount of $560,000,000, were issued bearing variable interest rates and subject to mandatory tender. On six occasions in 2013, portions of the STEM Bonds in the aggregate principal amount of $490,000,000 have been subject to mandatory tender and remarketing and the interest rates thereon were converted to fixed interest rates to maturity ( Fixed Rates ). The respective portions of the STEM Bonds converted on each occasion were redesignated, respectively, Subseries C-2 Bonds, Subseries C-3 Bonds, Subseries C-4 Bonds, Subseries C-5 Bonds, Subseries C-6 Bonds and Subseries C-7 Bonds (collectively, the Converted Series C Bonds ). Additional STEM Bonds in the amount of $70,000,000 are subject to mandatory tender and remarketing on December 19, 2013 and, following such remarketing, such STEM Bonds will be redesignated as Commonwealth Mortgage Bonds, 2012 Series C-Non-AMT, Subseries C-8, which bonds will be the Offered Bonds. When the interest rates on the Offered Bonds are converted to Fixed Rates, then all of the STEM Bonds will have had their interest rates converted to Fixed Rates. In this Official Statement, all references to date of delivery and date of delivery of the Offered Bonds shall mean such tender date with respect to the Offered Bonds referenced in this paragraph. On such tender date, the interest rate on the STEM Bonds so redesignated as the Offered Bonds will convert to Fixed Rates. The Offered Bonds are Tax Exempt Non-AMT Bonds. The Code imposes substantial requirements with respect to Tax Exempt Non-AMT Bonds, Tax Exempt AMT Bonds, and mortgage loans (including Mortgage Loans) financed, in whole or in part, with the proceeds of Tax Exempt Bonds which must be satisfied for the interest on such Tax Exempt Bonds to be excluded from gross income for federal income tax purposes pursuant to Section 103 of the Code. The Authority has established procedures under which the Authority expects such Code requirements can be met (see Federal Taxes in Tax Matters and Appendix D). The Offered Bonds, the Converted Series C Bonds, and the Series ABC-1 Bonds were issued pursuant to a common plan and treated as a composite issue for purposes of the Code. Failure to comply with federal tax requirements with respect to the Offered Bonds, the Converted Series C Bonds, or the Series ABC-1 Bonds may cause interest on the Offered Bonds to be included in gross income for federal income tax purposes (see Federal Taxes in Tax Matters ). U.S. Bank National Association, Minneapolis, Minnesota, is the Trustee. Except in the event of the occurrence and continuance of an Event of Default, the Authority may remove and replace the Trustee and may serve in the capacity of Trustee. The summaries of and references herein to the Act, the Resolution, the Current Resolution, and the Commonwealth Mortgage Bonds Resolution and other documents and materials are only brief outlines of certain provisions thereof and do not purport to summarize or describe all the provisions thereof. For further information, reference is hereby made to the Act, the 2

5 Resolution, the Current Resolution, and the Commonwealth Mortgage Bonds Resolution and such other documents and materials for the complete provisions thereof. DESCRIPTION OF THE OFFERED BONDS The proceeds of the Offered Bonds are expected to be used to finance Mortgage Loans, alone or in combination with net assets of the Resolution and proceeds of other Tax Exempt Bonds, including the other Series C Bonds, and Taxable Bonds (collectively, the Other Funds ). Notwithstanding such expectation, the Authority reserves the right to apply the proceeds of the Offered Bonds in any manner consistent with the provisions of the Resolution and the Code. The Offered Bonds shall be available in the denominations and in the aggregate principal amount and shall mature in the amounts and on the dates set forth on the front cover hereof. Interest on the Offered Bonds shall commence to accrue on their date of delivery and shall be payable semi-annually on the dates and at the interest rates set forth on the front cover hereof, calculated on the basis of a 360-day year consisting of twelve 30-day months. By purchasing one or more Offered Bonds from the Remarketing Agents, Beneficial Owners (as defined in Appendix G) of each Offered Bond will be deemed to have consented to Interest Payment Dates of April 1 and October 1 and the maturity date and Sinking Fund Installments described herein with respect to such Offered Bond. Principal and interest on the Offered Bonds shall be payable to the Owner thereof as described in Application of Assets for Payment of Bond Amounts in Summary of Certain Provisions of the Current Resolution. The Record Date for the payment of scheduled principal (including Sinking Fund Installments) and interest on the Offered Bonds shall be the 15th day of the month immediately preceding the month in which such scheduled principal or interest payment is to occur. The Record Date for the payment of principal and interest upon special or optional redemption shall be the date DTC receives notice of redemption from the Trustee. The Offered Bonds will be initially available and may be purchased only in book-entry form through the facilities of DTC. Accordingly, for the purposes of the Resolution, the Owner of the Offered Bonds shall be DTC s partnership nominee, Cede & Co., and all references herein to the Owners of the Offered Bonds shall refer to Cede & Co., as aforesaid, and shall not mean the Beneficial Owners of the Offered Bonds as defined in Appendix G. See Appendix G for a description of DTC and certain of its procedures. For every exchange or transfer of the Offered Bonds, the Authority or the Trustee may make a charge sufficient to reimburse it for any tax, fee, or other governmental charge required to be paid with respect to such exchange or transfer. Special Redemption The Offered Bonds are subject to special redemption at the option of the Authority, either in whole or in part, at a redemption price equal to 100% of the principal amount thereof on any one or more dates from (1) excess Revenues deposited in and other moneys transferred to the revenue fund (the Revenue Fund ) under the Resolution after required transfers therefrom to other funds have been made for the payment of the Bond Obligation and (2) any moneys held under the Resolution in any mortgage loan account or mortgage loan purchase account which the Authority determines will not be used to make or purchase Mortgage Loans. Excess Revenues include amounts which may be derived from the Offered Bonds, the other Currently Outstanding Bonds and any additional Commonwealth Mortgage Bonds hereafter issued, and such amounts may be applied to the redemption of the Offered Bonds, the other Currently Outstanding Bonds, and any additional Commonwealth Mortgage Bonds hereafter issued, except as otherwise agreed by the Authority. Such excess Revenues may be received from terminations (including prepayments) or sales of Mortgage Loans or sales of Authority Property. Such excess Revenues may, at the option of the Authority, be used to finance Mortgage Loans in compliance with Code requirements, if applicable (see Appendix D), and subject to the limitations described below. Accrued interest, if any, to the date of redemption will be paid upon redemption. See Selection of Bonds for Redemption below for a discussion of selection of amounts and maturities of Offered Bonds for redemption and of allocation of redemptions within a maturity. Certain Factors That May Affect Special Redemptions The Code currently requires the redemption of Tax Exempt Bonds (other than certain refunding bonds) from certain unexpended proceeds thereof and repayment of principal on the Mortgage Loans financed thereby (see Appendix D). Except for a $250,000 de minimis amount, unexpended proceeds of the Series C Bonds (including the Offered Bonds) which are expected to be used to finance Mortgage Loans but which shall not have been so used within 42 months from the issuance date of December 20, 2012, are required to be used to retire or redeem Series BC Bonds. Such Code requirement with respect to unexpended proceeds does not apply to the proceeds of the Series A Bonds or the Series B Bonds. The 10-Year Rule (defined in Other Requirements in Appendix D), as currently imposed by the Code, requires all or a portion of repayments and prepayments of principal of Mortgage Loans made with or attributable to proceeds of the Series BC Bonds to be used by the Authority to retire or redeem Series BC Bonds. The following table displays the expected years during which the 10-year period will have expired with respect to principal amounts of the Series BC Bonds. Such portion of repayments and prepayments to be used to redeem or retire Series BC Bonds is a fraction, the numerator of which is the 3

6 principal amount of then outstanding Series BC Bonds on which the 10 year period has expired (less any other Series BC Bonds retired in satisfaction of the 10-Year Rule requirement), and the denominator of which is the then outstanding principal amount of Series BC Bonds. The Authority cannot predict the actual repayments and prepayments it will receive or whether such Code provision may be repealed, and no assurance can be given that such actual redemptions will occur. Calendar Year Series BC Bonds 2012 $ ,340, ,170,000 $715,510,000 Factors which may affect the demand for Mortgage Loans and the amount of prepayments on Mortgage Loans financed by the Commonwealth Mortgage Bonds and consequently the Authority s ability to use the proceeds of Commonwealth Mortgage Bonds (including the Offered Bonds and other Series C Bonds), prepayments and other excess Revenues for the financing of Mortgage Loans include not only general economic conditions but also the relationship between alternative mortgage loan interest rates (including rates on mortgage loans insured or guaranteed by agencies of the federal government, rates on conventional mortgage loans and the rates on other mortgage loans available from the Authority) and the interest rates being charged on the Mortgage Loans by the Authority. Accordingly, lower interest rates on such alternative mortgage loans could cause a lack of demand for Mortgage Loans, could result in prepayments in amounts greater than anticipated and could necessitate the exercise by the Authority of its right (or compliance by the Authority with the requirements under the Code) to apply the proceeds of Commonwealth Mortgage Bonds (including the Offered Bonds and other Series C Bonds), prepayments and other excess Revenues to redeem the Offered Bonds. Mortgage Loans which are financed with proceeds of the Commonwealth Mortgage Bonds (including the Offered Bonds) or otherwise pledged pursuant to the Resolution may be refinanced, including by subsequent mortgage loans, including Mortgage Loans, made or purchased by the Authority or with respect to which the Authority is otherwise involved. Any such refinancings will result in the prepayments of the Mortgage Loans so refinanced and may result in the special redemption of Commonwealth Mortgage Bonds (including the Offered Bonds) from excess Revenues generated by such prepayments. The Authority may conduct marketing activities, including the solicitation of Mortgagors, that will offer and/or encourage such refinancings of Mortgage Loans and may have the effect of increasing the amount of prepayments and the amount of Commonwealth Mortgage Bonds (including the Offered Bonds) redeemed by special redemption. The Authority does not currently anticipate any sales of Mortgage Loans which would result in the special redemption of the Offered Bonds; however, no assurance can be given that no such sales will occur. See Withdrawal, Transfer, Sale, Exchange and Modification of Assets in Summary of Certain Provisions of the Current Resolution for a discussion of the Authority s ability to so sell Mortgage Loans. The Code requires a payment from certain Mortgagors, including Mortgagors with Mortgage Loans financed in whole or in part by the Series BC Bonds, to the United States as described in Recapture in Appendix D. Such requirement may affect the demand for or rate of prepayment of Mortgage Loans financed or to be financed in whole or in part by Qualified Mortgage Bonds (as defined in Appendix D). A decrease in the demand for Mortgage Loans may result in the redemption of Offered Bonds from prepayments on Mortgage Loans (or other excess Revenues) which in the determination of the Authority are not to be recycled to make or finance Mortgage Loans. An increase or decrease in the rate of prepayment of Mortgage Loans may affect the amount of moneys available for redemption of Commonwealth Mortgage Bonds or the recycling of funds into other Mortgage Loans as described under this subheading and may affect the average life of Commonwealth Mortgage Bonds. The Authority cannot predict what effect, if any, such requirement will have on the origination or prepayment of Mortgage Loans subject to such requirement. The Authority expects to use the proceeds of the Offered Bonds to make Mortgage Loans on a concurrent and competitive basis with mortgage loans financed or subsidized by existing or future Authority bond proceeds or other moneys, methods of financing, or programs, including proceeds of the other Currently Outstanding Bonds and any Commonwealth Mortgage Bonds hereafter issued, as well as securitizations through Government National Mortgage Association ( Ginnie Mae ) and sales to or securitizations through Federal National Mortgage Association ( Fannie Mae ) and/or the issuance of federal Mortgage Credit Certificates. Optional Redemption The Offered Bonds maturing on or after October 1, 2023, are subject to redemption, at the election of the Authority, either in whole or in part on any date on or after October 1, 2022 ( the First Optional Redemption Date ), at a Redemption Price 4

7 equal to the principal amount, without premium, of the Offered Bonds to be so redeemed. Accrued interest, if any, to the date of redemption will be paid upon redemption. See Selection of Bonds for Redemption below for a discussion of selection of amounts and maturities of Offered Bonds for redemption and of allocation of redemptions within a maturity. Sinking Fund Redemption The Offered Bonds designated as Term Bonds on the front cover hereof are subject to redemption in part prior to maturity from mandatory Sinking Fund Installments which are required to be made in the amounts specified for each of the dates shown below. The Redemption Price shall be the principal amount of the Term Bonds to be redeemed. Accrued interest, if any, to the date of redemption will be paid upon redemption. In the event of a partial redemption of a maturity of Term Bonds (other than in satisfaction of Sinking Fund Installments) or the purchase and cancellation of less than all of a maturity of Term Bonds, the Authority shall instruct the Trustee as to which Sinking Fund Installments shall be affected by such redemption or purchase and cancellation. See Selection of Bonds for Redemption below for a discussion of allocation of redemptions within a maturity. Offered Bonds Maturing October 1, 2031 Offered Bonds Maturing October 1, 2038 Sinking Fund Installment Date Principal Amount Sinking Fund Installment Date Principal Amount October 1, 2026 $3,215,000 October 1, 2032 $3,185,000 October 1, ,215,000 October 1, ,150,000 October 1, ,210,000 October 1, ,150,000 October 1, ,210,000 October 1, ,150,000 October 1, ,210,000 October 1, ,150,000 October 1, 2031* 3,210,000 October 1, ,245,000 $19,270,000 October 1, 2038* 3,280,000 $22,310,000 * Maturity Date Selection of Bonds for Redemption When redeeming Offered Bonds as described in the above sections entitled Special Redemption and Optional Redemption, the Authority has complete discretion to select the amounts and maturities of Offered Bonds to be redeemed. In so selecting the amounts and maturities of Offered Bonds to be redeemed, the Authority expects to consider such factors as it deems relevant at that time to best achieve its financial and programmatic purposes. Such factors may include, but need not be limited to, interest rates and maturities of then Outstanding Bonds and any future legislation and regulations affecting the Commonwealth Mortgage Bonds, including Tax Exempt Bonds or single family mortgage loan originations (see Changes in Federal or State Law and Programs in Certain Programmatic Considerations ), and the impact of the 10 Year Rule on the Series BC Bonds then outstanding; however, no assurance can be given as to whether those factors or any other factors will be considered or as to how such factors will be applied in the selection of the Offered Bonds to be redeemed. If the Offered Bonds are registered in book-entry only form and so long as DTC or a successor securities depository is the sole registered Owner of the Offered Bonds and if less than all of a maturity of the Offered Bonds is to be redeemed, such redemption shall be made on a pro rata pass-through distribution of principal basis in accordance with DTC procedures, provided that, so long as the Offered Bonds are held in book-entry only form, the redemption of such Offered Bonds shall be made in accordance with the operational arrangements of DTC then in effect. If the DTC operational arrangements do not allow for the redemption of the Offered Bonds on a pro rata pass-through distribution of principal basis, then the Offered Bonds will be selected for redemption by lot in accordance with DTC procedures. It is the Authority's intent that redemption allocations for the Offered Bonds made by DTC be made on a pro rata pass-through distribution of principal basis as described above. However, the Authority cannot provide any assurance that DTC, DTC s direct and indirect participants or any other intermediary will allocate the redemption of the Offered Bonds on such basis. If the Offered Bonds are not registered in book-entry only form, any redemption of less than all of a maturity of the Offered Bonds shall be allocated in authorized denominations among the registered Owners of such Offered Bonds on a pro rata basis. Notice to Owners Notice of any redemption of an Offered Bond will be sent to the Owner thereof at least 20 days, or such lesser number of days that is permitted by DTC, prior to the date of redemption. Any notice to Owners required pursuant to the Current Resolution shall be sent or transmitted, at the Authority s direction, by mail or other means of physical delivery, or by facsimile or other electronic means to such Owner at his last address, physical or electronic, set forth in the Registration Books. 5

8 Purchase In lieu of the redemption of any Commonwealth Mortgage Bond, the Authority may direct the Trustee in an Officer s Certificate to purchase such Bond from any Owner willing to sell such Bond. In addition, the Authority may at any time direct the Trustee in an Officer s Certificate to purchase, with Assets or other assets of the Authority, any Commonwealth Mortgage Bond from any Owner willing to sell such Bond. In either case, the purchase price shall be determined by, or in accordance with the directions of, the Authority. Pledge of Assets SECURITY The Commonwealth Mortgage Bonds, including the Offered Bonds, are secured, to the extent and as provided in the Commonwealth Mortgage Bonds Resolution, by a pledge of the Assets, which consist of Mortgage Loans (see Data on Commonwealth Bond Mortgage Loans in Appendix B for certain information concerning the Mortgage Loans), Authority Property, Revenues and Investment Obligations, and, to the extent made subject to the pledge or lien of the Resolution, Enhancement Agreements, Exchange Agreements and Other Financial Agreements (see Assets and the Pledge Thereof in Summary of Certain Provisions of the Current Resolution ). The Commonwealth Mortgage Bonds Resolution imposes no requirements on the Authority as to a minimum amount or type of Assets. The Commonwealth Mortgage Bonds Resolution permits the Authority to (i) purchase, sell, exchange, transfer and modify Assets, (ii) apply Assets to the payment of Expenses, and (iii) withdraw Assets from the Commonwealth Mortgage Bonds Resolution thereby releasing such Assets from the lien and pledge created by the Resolution subject only to the satisfaction of the Revenue Test (see Withdrawal of Assets; Limited Operating Covenants ). The Authority may contribute single family mortgage loans to the Resolution that become Assets following such contribution. Since the date of the most recent financial statements (audited or unaudited) in Appendix A the Authority has withdrawn no Assets from the Resolution and has contributed no single family mortgage loans to the Resolution. The Authority can give no assurances that it will or will not make any future withdrawals or contributions. The Act provides that any pledge made by the Authority is valid and binding from the time such pledge is made and that the Authority s interest, then existing or thereafter obtained, in revenues, moneys, mortgage loans, receivables, contract rights or other property or proceeds so pledged shall immediately be subject to the lien of such pledge without any physical delivery or further act, and the lien of such pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise against the Authority, irrespective of whether such parties have notice thereof. The Act further provides that no instrument by which a pledge is created need be recorded nor shall any filing be required with respect thereto. The Authority does not expect to record or file any deed of trust, mortgage or other instrument creating or evidencing the pledge or lien created by the Resolution with respect to any Asset or other Asset hereafter pledged to secure the Commonwealth Mortgage Bonds. The Authority does not expect to physically deliver Assets to the Trustee. The Commonwealth Mortgage Bonds Resolution does not require the establishment and funding of any debt service reserve fund or any other reserve fund, and the Authority does not expect to establish or fund any such reserve fund. Mortgage Loans The Mortgage Loans are Assets that are subject to the lien and pledge of the Resolution. See The Single Family Programs and see Data on Commonwealth Mortgage Loans in Appendix B for certain information concerning the Mortgage Loans. Exchange Agreements, Enhancement Agreements, and Other Financial Agreements The Current Resolution permits the Authority to execute Exchange Agreements (such as swap agreements), Enhancement Agreements (such as agreements related to bond insurance) and Other Financial Agreements under which the Authority obligations are payable from Assets and are treated as Bond Obligations payable from the same sources and on a parity basis with the Commonwealth Mortgage Bonds (see Incurrence of Additional Bond Obligations in Summary of Certain Provisions of the Current Resolution ). Any Enhancement Agreements, any Exchange Agreements or any Other Financial Agreements, including those made subject to the pledge or lien of the Resolution, are subject to the risk that the other parties to such Agreements may not satisfy their obligations set forth in such Agreements. The Commonwealth Mortgage Bonds Resolution does not establish minimum rating requirements for such other parties. There are no outstanding Exchange Agreements under which the Authority s obligations are payable from Assets. As of September 30, 2013, approximately $29.3 million of Outstanding Bonds are insured, at the request of the Authority, by a third party. The annual premium on such insurance is, and any premiums on any future insurance may be, payable from Assets. In addition, the Authority may, in connection with the issuance of Ginnie Mae securities and Fannie Mae securities (see Ginnie Mae Financing and Fannie Mae Financing in The Single Family Programs ), enter into Other Financial Agreements under which the Authority agrees with securities dealers to deliver such securities in specified amounts and by specified dates and is liable to the securities dealers for loss due to failure to so deliver such securities. Any such liability would 6

9 be payable from Assets. As of September 30, 2013, the Authority was obligated to deliver $236.4 million of such securities under such Other Financial Agreements. In order to provide additional funds for its programs and other legally permissible purposes, the Authority considers from time to time the sale of existing or newly originated single family mortgage loans allocated or to be allocated to its general fund (the General Fund ) or the Resolution. In connection therewith, the Authority may enter into one or more Other Financial Agreements with the purchaser of such mortgage loans that would secure the Authority s obligations to such purchaser to repurchase such single family mortgage loans, to fund any payment deficiencies or otherwise compensate the purchaser upon occurrence of certain events, such as a specified number of delinquent monthly payments on the mortgage loans or breaches of representations and warranties by the Authority with respect to the mortgage loans. No assurances can be given whether the Authority will effect such sale or enter into any of the above described Other Financial Agreements or as to the amounts or terms thereof or the amounts that would be payable from Assets. Investment Obligations The Authority maintains a substantial portion of Assets as Investment Obligations. Investment Obligations that are eligible under the Resolution are set forth in the definition thereof in Definitions in Summary of Certain Provisions of the Current Resolution and include (i) any investment (debt or other contractual obligation or equity interest) which, in the determination of an Authorized Officer, is a suitable investment, in light of the amount and timing of Bond Obligation payments, the amount of Assets, and the availability of monies to pay Bond Obligations as they become due, at the time of acquisition thereof, and (ii) certain investments which bear, or the obligor(s) or guarantor(s) thereof bear, an investment grade rating assigned by a nationally recognized rating agency. See Investments and The Common Fund in The Authority for additional information concerning Investment Obligations. Sources of Payment The scheduled payments of Bond Amounts, including the principal of and the interest on the Offered Bonds and any Enhancement Agreements, any Exchange Agreements or any Other Financial Agreements that are payable from Assets, have been or are expected to be based upon the assumed receipt by the Authority of principal and interest or other payments on or with respect to Mortgage Loans and Investment Obligations, any Revenue with respect to Authority Property (excluding such income to be applied to the payment of operating expenses or to be deposited into reserve or escrow funds for such Authority Property), payments with respect to any Enhancement Agreement, any Exchange Agreement or any Other Financial Agreements pledged as Assets, and net assets of the Authority, including net assets pledged under the Resolution. The ability of the Authority to pay Bond Amounts, including principal and interest on the Offered Bonds, may be adversely affected by several factors including (i) failure to receive principal and interest or other payments or income when due or any time thereafter with respect to Mortgage Loans, Investment Obligations and any Enhancement Agreement, Exchange Agreement or Other Financial Agreement pledged as Assets, (ii) terminations and prepayments of Mortgage Loans at times and at rates not anticipated by the Authority, (iii) Mortgage Loans, Investment Obligations and other assets not being made, financed or acquired at the times, interest rates or prices, as applicable, contemplated by the Authority or not being made, financed or acquired at all, and (iv) losses from the sale or other disposition of Assets. A portion of such Mortgage Loan terminations are due to foreclosure, deed in lieu of foreclosure, and assignment to mortgage loan companies. The Authority does not necessarily receive cash upon the occurrence of such terminations. The receipt of cash for such terminations may occur at a later time and may be for an amount less than the amount which was due under the Mortgage Loan. In establishing the principal amounts and dates of the maturities and Sinking Fund Installments for the Currently Outstanding Bonds, including the Offered Bonds, the Authority has assumed certain levels of prepayments of Mortgage Loans, a substantial portion of which will be used to pay such principal amounts and Sinking Fund Installments. Such assumed levels are percentages (0% or higher) of the Securities Industry and Financial Markets Association prepayment rate model (commonly referred to as the PSA Rate ). For this purpose, revenues received by the Authority as a result of defaults on Mortgage Loans are treated as prepayments. The PSA Rate is a model that utilizes an assumed rate of prepayment each month relative to the then outstanding principal balance of a pool of mortgage loans. The PSA Rate assumes constant prepayment rates of 0.2% per annum of the then outstanding principal balance of such mortgage loans in the first month of the life of the mortgage loan and an additional 0.2% per annum in each month thereafter until the thirtieth month. Beginning in the thirtieth month and in each month thereafter during the life of the mortgage loans, the PSA Rate assumes a constant prepayment rate of 6% per annum. The PSA Rate does not purport to be a historical description of prepayment experience or a prediction of the anticipated rate of prepayment of any pool of mortgage loans, including the Mortgage Loans financed by the Commonwealth Mortgage Bonds. Set forth below are the percentages (if any) of the PSA Rates used by the Authority in assuming the above described levels of prepayments of Mortgage Loans financed by the Currently Outstanding Bonds. The Series of Commonwealth Mortgage Bonds marked pass-through each have monthly Sinking Fund Installments or principal payment obligations equal to the sum of (or a specified percentage of the sum of) scheduled principal payments on the Mortgage Loans allocated to such series, prepayments received on such allocated Mortgage Loans and certain other payments relating to such allocated Mortgage Loans and have a stated maturity date corresponding to the date of the last scheduled payment on any such allocated Mortgage Loan. 7

10 Pass-through or Percentage Bond Series PSA Rate Assumed 2002 Series B pass-through 2002 Series E pass-through 2003 Series C pass-through 2004 Series B pass-through 2005 Series AB 64% 2005 Series CDE 100% 2006 Series A pass-through 2006 Series B pass-through 2006 Series C pass-through 2006 Series DEF 50% 2007 Series ABCD 47% 2008 Series A pass-through 2008 Series B pass-through 2008 Series C pass-through 2009 Series A not applicable 2012 Series ABC 20% 2013 Series B pass-through 2013 Series C pass-through The past events represented by the PSA Rate are not necessarily indicative of future events. As a result, there can be no assurance that the prepayment experience of the Authority will substantially parallel those of the PSA Rate. The Authority s exercise of its rights to redeem some of the Commonwealth Mortgage Bonds may change the percentage of the PSA Rate required to meet scheduled debt service on the Commonwealth Mortgage Bonds on or after the redemption dates of such Commonwealth Mortgage Bonds. In estimating investment income to be received on moneys held under the Resolution, the Authority assumes the investment of such funds at such interest rates as are deemed reasonable based on market conditions at the time of issuance of the applicable series of Commonwealth Mortgage Bonds. On the basis of the foregoing facts and assumptions, the Authority expects that the Revenues and other income to be received with respect to the Offered Bonds and the other Currently Outstanding Bonds will be in excess of the scheduled debt service thereon. Certain excess Revenues must be used to redeem Commonwealth Mortgage Bonds, which may include the Offered Bonds (see Special Redemption above). Any other excess Revenues may be used to purchase or redeem Commonwealth Mortgage Bonds, including the Offered Bonds, that are then subject to redemption from such excess Revenues, as described in Special Redemption and Optional Redemption above. In reaching such expectation in the first sentence of this paragraph, the Authority has not considered the issuance of additional Commonwealth Mortgage Bonds or the application or investment of the proceeds thereof. The Authority believes its assumptions regarding the Offered Bonds and the other Currently Outstanding Bonds to be reasonable, but the Authority can give no assurance that the actual receipt of Revenues (including principal prepayments) will correspond with its estimates of available money to pay debt service on the Offered Bonds and the other Currently Outstanding Bonds. Amendments to Resolution; Commonwealth Mortgage Bonds Acquired by the Authority The Current Resolution authorizes amendments to certain provisions therein by supplemental resolution of the Authority without the consent of Owners. Pursuant to such authorization, the Authority may, subject to the Revenue Test, amend the Current Resolution in any respect, except as described in (7) in Amendments in Summary of Certain Provisions of the Current Resolution. The Current Resolution, including the Revenue Test, also may be amended with the consent of the Owners of more than sixty percent (60%) of the Bond Obligation. Any of the foregoing amendments may adversely affect the security for the Commonwealth Mortgage Bonds. (See Amendments in Summary of Certain Provisions of the Current Resolution ). Pursuant to the Act and the Current Resolution, the Authority may purchase or otherwise acquire the actual or constructive ownership of Commonwealth Mortgage Bonds prior to the maturity or redemption thereof with the intent that such Commonwealth Mortgage Bonds remain Outstanding, subject to any terms and conditions determined by the Authority. Any Commonwealth Mortgage Bonds so owned by the Authority shall be entitled to vote or give consents under the Resolution, except with respect to amendments to the Resolution, and remedies and appointment and removal of the Trustee upon an Event of Default. Any such vote or consent may adversely affect the security for the Commonwealth Mortgage Bonds. General Obligations of the Authority The Offered Bonds are also general obligations of the Authority payable out of any of its revenues, moneys or assets, subject to agreements heretofore or hereafter made with owners of Authority obligations other than the Owners pledging particular revenues, moneys or assets for the payment thereof. The Authority has a long-term general obligation rating of Aa1 from Moody s Investors Service ( Moody s ) and a long-term Issuer Credit rating of AA+ from Standard & Poor s Ratings Services ( Standard & Poor s or S&P ). See Ratings. The security provided the Offered Bonds by the Authority s general 8